The latest figures from the Investment Association for June, can be found here. Highlights include:
Investors are downbeat on markets, with inflows 75% lower than this time last year
Fixed income funds were hit the hardest, with £327m of outflows
Total assets stayed broadly flat in the month, down 0.5%
Laura Suter, personal finance analyst at AJ Bell, said:
“Investors fled from fixed income funds in June, with net withdrawals of £327m during the month. This compares to net inflows of £368m in May and of more than £1bn in June last year. This is likely linked to the expectation that the Bank of England is expected to increase interest rates today.
“After seeing a flood of inflows since the Brexit vote, Strategic Bond funds were hit hardest in June, with outflows of £413m. It marks a clear turnaround for investors, who until this month had been packing their portfolios with the funds – with £9.6bn of inflows since April 2016.
“Despite the fact that the Bank of England is widely expected to raise rates today, on the back of a slightly stronger economy, investors are not convinced and continued to withdraw money from UK equity funds – with £280m of net outflows in the month. Despite the outflows, this is a significant pullback on last month’s £1.2bn net outflows.
“Instead investors are preferring to put their cash overseas, pegging their fortunes on higher growth nations. America has been the biggest beneficiary, with the tax cuts and strong economy drawing investors in, who allocated almost £250m to the US in June.
“Total assets under management stayed pretty flat in June, falling by 0.5%, but investors are clearly not bullish on markets as they put 75% less money into investment funds when compared to June last year.
“As interest rates are set to rise later today, it will be interesting to see in next month’s figures how investors react to this news and whether they shift their allocations back into UK equity funds amid hopes of a stronger economy.”